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Common Let to Buy Mortgage Questions

A Let to Buy Mortgage can be a comple process and if you are planning to keep, rent your home out, and raise a mortgage for an onward purchase, you’ll probably have lots of questions and lots to consider. If you have a question that isn’t answered here, please just ask.

Do you have a question about a let to buy mortgage?

If you have a question about a let to buy mortgage that is not covered here, please contact us.

What is a Let to Buy Mortgage?

A let to buy mortgage is easiest explained by discribing the scenario you will need one:

Imgaine you live in your home now, but suddenly you want to move to a larger property.

Rather than selling your home you think it might be a good idea to keep it and rent it out.

Remember this can be a great solution for a market which takes a long time to sell, where you want to purchase quickly, where you don’t want to be stuck in a chain or where you want to keep hold of your home for property investing purposes.

The problem you face by doing this, is you probably don’t have a deposit to put down on the new house you want to move into! If you do, then a different solution might be required, but lets assume you don’t for now.

Essentially it means you’ll have two mortgages; one on your (soon to be) rental and a new one on the new home.

The solution is to get a let to buy mortgage on your home and borrow a bit more, which then acts as the deposit for your purchase.

Now the important thing to manage is also the onward purchase, as the lender for your new home will want to know everything about your let to buy mortgage.

In other words both mortgages are very closely linked and intertwinded. In a nutshell, both mortgages have to be very carefully managed.

A let to buy is a complex scenario and its vital to work with experienced mortgage brokers who are used to these scenarios.

How does a let to buy mortgage work?

A let to buy mortgage is used as a way to keep your existing home and turn it into a renal property which you keep. The let to buy mortgage enables you to raise enough of a deposit, so you can use this to help buy a new home.

The advantage of a let to buy mortgage, is that enables you to keep your existing assets, avoids you having to sell inorder to move, and can enable you to move much quicker.

When you are doing this, the likelihhod is that you will also need a new residential mortgage on the property you are moving into. You have raised the deposit from your existing property (by way of a let to buy mortgage) and you’ll then need to get a resiednital one.

Becuase multiple transactions are usaully happening simultaneously, both transactions are linked, even when you are using completely different lenders. So it is critical that both lenders are happy with the overall scenario and this does bring in an extra element of complexity.

If you are considering doing this, then it is always advisable to seek professional independent mortgage advice from an experienced broker who has experience of dealing with these complex sceanrios.

If you would like to discuss your own sceanrio, please feel free to get in touch.

What is the<br />
difference between a let to buy and buy to let mortgage?

The difference between a let to buy and a buy to let mortgage, is the way you get to the end point, which is you’ll have a buy to let property.

The difference is only really relevant when you are arranging a mortgage and the way this is structured.

A let to buy mortgage is usually used to rasie the deposit on your home (which you will rent out) and when you move out you will be moving into a new home, which you might need a new residential mortgage for.

A buy to let mortgage on the other hand is a property which is currently being rented or will be rented if you are looking to buy, but which is not your home.

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We may be mortgage brokers, but we’re not a bunch of bankers! We are independent which means we only work for you. Our team are incentivised not on sales, but providing the best service for you.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.Barr Financial is a trading name of Benjamin Parry who is authorised and regulated by the Financial Conduct Authority. Our FCA Number is 506976. The FCA does not regulate some investment mortgage contracts. Barr Financial are also members of the NACFB (National Association of Commercial Finance Brokers). The Commercial Mortgage Sector is currently a non-regulated activity, as defined by the FCA. Therefore client protection is limited. The only recognised body is the National Association of Commercial Finance Brokers. The NACFB has established complaints and disciplinary procedures designed to eliminate unacceptable working practices amongst its members and Barr Financial subscribe to their standards.